Line break charts

What are Line break charts

Line break is a Japanese chart type that disregards time intervals and only focuses on price movements, similar to the Kagi and Renko charts.

Line break charts form a series of up and down bars (referred to as lines). Up lines represent rising prices, and down lines represent falling prices. New confirmed lines only form on the chart when closing prices break the range covered by previous lines.

You can control the number of past lines used in the calculation via the "Number of Lines" input in the chart settings. The typical "Number of Lines" setting is 3, which means that the chart forms a new up line only when the closing price is above the high prices of the last three lines, and forms a new down line when the closing price is below the past three lines' low prices.

If the current price is higher, it is an up line and if it is lower, it is a down line. If the current closing price is the same or the move in the opposite direction is not large enough to warn about a potential a reversal, then no new line is drawn.

Line types

There are four types of lines:

Up lines: Form during an uptrend
Down lines: Form during a downtrend
Projected up lines: During an intraday timeframe, a potential up line that would form based on current price (before actual closing price is set)
Projected down lines: During an intraday timeframe, a potential down line that would form based on current price (before actual closing price is set)

Line calculation method

Each new closing price has three possible outcomes

New line, same color: When price extends in the same direction
New line, different color: When the price change is large enough to warrant a reversal
No new line: When price does not change or the reversal is not large enough to warrant a new line

The user defines the "Number of Lines" value. The chart compares the current close to the high and low values from the "Number of Lines" previous lines. If the input's value is 3, the calculation compares the current close to the highs and lows of the latest three confirmed lines, forming a new up or down line only when the close is above the highs or below the lows. The appropriate line is then drawn (or not drawn) based on the above guidelines.

Uses of line break charts

Very much like Kagi charts and Renko charts, Line break charts are popular because of the way that they filter out noise and make price movements easy to digest and understand. Some of the typical uses of Line Break charts are finding support and resistance, spotting breakouts, and discovering classic chart patterns.

Support and resistance: Line break charts reveal areas of support and resistance.

Breakouts: Occur when bars begin to generate in a defined direction after a period of trading within a support and resistance bound trading range.

Classic chart patterns: Allows to spot classic chart patterns.

Line break charts settings

Up Bars: Change the color and outline of up bars
Down Bars: Change the color and outline of down bars
Projection Up Bars: Change the color and outline of projected up bars
Projection Down Bars: Change the color and outline of projected down bars